Managing Risks Effectively
Anticipate business risks and seize their upside opportunity with the latest IESE Insight Review
Risk need not be so fearsome, provided you arm yourself with the winning advice of IESE Insight / Illustration: Luciano Lozano Raya
In an age when the risks facing companies are becoming ever more complex and imminent, IESE Insight Review dedicates Issue 28 to the growing importance of Risk Management.
The cover dossier, titled “Managing Risks Effectively,” contains three articles tackling the subject from different angles of general management: strategy, corporate governance and stakeholder engagement. As guest editor Josep Tàpies writes, “It would be a mistake for board directors and senior management teams to respond to risk by shying away from their responsibilities.” Instead, he urges readers to follow the advice of these expert professors.
Philip Bromiley (University of California, Irvine) and Devaki Rau (Northern Illinois University) start by helping readers focus on strategic risks, offering nine practical suggestions to make the risk management process more meaningful and relevant, so it doesn’t turn into an empty, overwhelming paper-processing exercise.
IESE’s Gaizka Ormazabal describes the growing pressure on boards to oversee corporate risk and how companies are responding. His research testifies to a growing trend: the likelihood of directors to resign from their positions on the boards of risky firms, owing to the higher personal costs they are expected to assume in the wake of the global financial crisis.
However, running from risk is not the answer, as Witold J. Henisz (Wharton) makes clear in his article on corporate diplomacy. He advocates engaging with stakeholders constructively, highlighting the 12 risks to avoid when doing so.
Alejandro Ruelas-Gossi (University of Miami) picks up on this theme. He proposes an alternative approach to business model development in a globalized world, away from low-cost competition and toward shared value based on strategic orchestration – the very thing that players like Airbnb, the subject of the magazine’s case discussion, do so well.
Alex Cruz knows all about this, having made a name for himself as CEO first of the low-cost European airline Vueling and soon of British Airways. It’s not enough to compete on cost with a commoditized product, he tells IESE’s José Luis Nueno in an exclusive interview. You have to deliver more, he says, continuously adapting to the challenges and opportunities along the way.
Finally, Dr. Rafael Matesanz provides further insights into operational excellence, this time from the standpoint of Spain’s National Transplant Organization. How they became No. 1 globally contains valuable management lessons for everyone.
Members of the Alumni Association and subscribers to IESE Insight Review – a quarterly research-based magazine, published in separate English and Spanish editions – can read all these articles using their membership credentials.